Which of the Following Statements Is False

question 55

Multiple Choice

Which of the following statements is false?

• A) With no debt, the WACC is equal to the unlevered equity cost of capital.
• B) With perfect capital markets, a firm's WACC is dependent on its capital structure and is equal to its equity cost of capital only if the firm is unlevered.
• C) As the firm borrows at the low cost of capital for debt, its equity cost of capital rises, but the net effect is that the firm's WACC is unchanged.
• D) Although debt has a lower cost of capital than equity, leverage does not lower a firm's WACC.

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Definitions:

Mutual Aid Societies

Community-based organizations that provide assistance and support to members in times of need, operating on principles of mutual help.

California's Workingmen's Party

A political organization established in the 19th century, focused on addressing labor issues and protecting workers' rights in California.

Omaha Platform

The political agenda adopted by the Populist Party during their national convention in Omaha in 1892, advocating for various economic reforms.